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Operations Management
An Integrated Approach ^
INTERNATIONAL STUDENT VERSION

R. Dan Reid
Nada R. Sanders

WILEY
 C 0 N T E NT S
CHAPTER 1 CHAPTER
Basics of Operations Management l
WHAT IS OPERATIONS MANAGEMENT? 2
Links to Practice: The E-tailers 4
DIFFERENCES BETWEEN MANUFACTURING AND SERVICE
ORGANIZATIONS 5
Links to Practice: U.S. Postal Service 6
OPERATIONS MANAGEMENT DECISIONS 7
Links to Practice: Texas Instruments Incorporated
PLAN OF THIS BOOK 10
HISTORICAL DEVELOPMENT 1 1
WhyOM? 11
Historical Milestones 11
The Industrial Revolution 12
Scientific Management 13
The Human Relations Movement 14
Management Science 14
The Computer Age 15
Just-in-Time 15
Total Quality Management 15
Business Process Reengineering 16
Flexibility 16
Time-Based Competition 16
Supply Chain Management 16
Links to Practice: The Publishing Industry
Global Marketplace 18
Sustainability and Green Operations 18
Electronic Commerce 18
Outsourcing and Flattening of the World 19
TODAY'S OM ENVIRONMENT 2 0
OPERATIONS MANAGEMENT IN PRACTICE 2 1
WITHIN OM: HOW IT ALL FITS TOGETHER 2 1
OM ACROSS THE ORGANIZATION 2 2
THE SUPPLY CHAIN LINK 2 4
THE SUSTAINABILITY LINK 2 4
Chapter Highlights 25
Key Terms 25
Discussion Questions 25
Selected Bibliography 26
2
Strategy and Productivity 27
THE ROLE OF OPERATIONS STRATEGY 29
The Importance of Operations Strategy 29
DEVELOPING A BUSINESS STRATEGY 3 0
Mission 30
Environmental Scanning 31
Core Competencies 33
9 Putting It Together 34
Links to Practice: Dell Computer Corporation 34
DEVELOPING AN OPERATIONS STRATEGY 35
Competitive Priorities 35
Links to Practice: Southwest Airlines Company 36
Links to Practice: FedEx Corporation 38
The Need for Trade-Offs 38
Order Winners and Qualifiers 39
Translating Competitive Priorities into Production
Requirements 40
STRATEGIC ROLE OF TECHNOLOGY 4 1
Types of Technologies 41
Technology as a Tool for Competitive Advantage 42
PRODUCTIVITY 4 2
Measuring Productivity 42
Interpreting Productivity Measures 45
17 Productivity and Competitiveness 45
Productivity and the Service Sector 46
OPERATIONS STRATEGY WITHIN OM:
HOW IT ALL FITS TOGETHER 46
OPERATIONS STRATEGY ACROSS
THE ORGANIZATION 4 7
THE SUPPLY CHAIN LINK 4 7
THE SUSTAINABILITY LINK 4 8
Chapter Highlights 48
Key Terms 49
Formula Review 49
Solved Problems 49
Discussion Questions 50
Problems 50
Selected Bibliography 51
XV
xvi • CONTENTS

CHAPTER 3 Formula Review 91

Product and Process Design 53 Solved Problems 91
Discussion Questions 93
PRODUCT DESIGN 55
Problems 93
Design of Services versus Goods 55
Selected Bibliography 95
THE PRODUCT DESIGN PROCESS 56
Idea Development 56
CHAPTER 4
Links to Practice: IBM Corporation 57
Product Screening 58 Global Supply Chain Management 97
Preliminary Design and Testing 60 WHAT IS A SUPPLY CHAIN? 9 8
Final Design 60 COMPONENTS OF A SUPPLY CHAIN FOR A
FACTORS IMPACTING PRODUCT DESIGN 6 1 MANUFACTURER 1 0 0
Design for Manufacture 61 External Suppliers 100
Product Life Cycle 62 Internal Functions 102
Concurrent Engineering 63 External Distributors 102
Remanufacturing 64 THE BULLWHIP EFFECT 102
PROCESS SELECTION 64 Causes oftheBullwhip Effect 103
Types of Processes 64 Counteracting the Bullwhip Effect 104
DESIGNING PROCESSES 6 8 SUPPLY CHAINS FOR SERVICE ORGANIZATIONS 1 0 4
PROCESS PERFORMANCE METRICS 70 Internal Operations 105
LINKING PRODUCT DESIGN AND PROCESS The External Distributors 106
SELECTION 73 MAJOR ISSUES AFFECTING SUPPLY CHAIN
Product Design Decisions 74 MANAGEMENT 106
Links to Practice: The Babcock & Wilcox Company 74 Information Technology 106
Competitive Priorities 75 E-Commerce 106
Facility Layout 75 Business-to-Business (B2B) E-Commerce 107
Product and Service Strategy 77 The Evolution of B2B Commerce 107
Degree of Vertical Integration 77 The Benefits of B2B E-Commerce 108
TECHNOLOGY DECISIONS 7 8 Business-to-Consumer (B2C) E-Commerce 108
Information Technology 78 Consumer Expectations and Competition Resulting
Links to Practice: Using GPS Technology in Product from E-Commerce 109
Advertising 79 Links to Practice: Lands' End, Inc. 109
Automation 79 Globalization 110
Links to Practice: Performing Robotic Surgery 8 1 Government Regulations and E-Commerce 112
e-Manufacturing 8 2 Green Supply Chain Management 112
DESIGNING SERVICES 83 Infrastructure Issues 115
How Are Services Different from Manufacturing? 83 Product Proliferation 116
How Are Services Classified? 84 THE ROLE OF PURCHASING 116
The Service Package 85 The Traditional Purchasing Process 116
Differing Service Designs 86 The E-purchasing Process 118 ~
PRODUCT DESIGN AND PROCESS SELECTION WITHIN SOURCING ISSUES 1 2 1
OM: HOW IT ALL FITS TOGETHER 87 Insourcing versus Outsourcing Decisions 122
PRODUCT DESIGN AND PROCESS SELECTION ACROSS Developing Supplier Relationships 124
THE ORGANIZATION 8 8 How Many Suppliers? 124
THE SUPPLY CHAIN LINK 8 9 Developing Partnerships 125
THE SUSTAINABILITY LINK 89 Links to Practice: The Bama Companies 126
Chapter Highlights 90 Critical Factors in Successful Partnering 127
Key Terms 91 Links to Practice: Sweetheart Cup Company/
 CONTENTS • XVii

Georgia-Pacific Corporation 127 Product Design 167

Benefits of Partnering 129 Process Management 172
Ethics in Supply Management 130 Managing Supplier Quality 172
SUPPLY CHAIN DISTRIBUTION 1 3 1 QUALITY AWARDS AND STANDARDS 173
The Role of Warehouses 131 The Malcolm Baldrige National Quality Award
Links to Practice: Fingerhut Direct Marketing, Inc. 132 (MBNQA) 173
Crossdocking 133 The Deming Prize 174
Links to Practice: FedEx Freight 133 ISO 9000 Standards 174
Radio Frequency Identification Technology (RFID) 135 ISO 14000 Standards 175
Third-Party Service Providers 136 WHY TQM EFFORTS FAIL 176
IMPLEMENTING SUPPLY CHAIN MANAGEMENT 137 TOTAL QUALITY MANAGEMENT (TQM) WITHIN 0 M :
Strategies for Leveraging Supply Chain HOW IT ALL FITS TOGETHER 176
Management 138 TOTAL QUALITY MANAGEMENT (TQM) ACROSS THE
SUPPLY CHAIN PERFORMANCE METRICS 139 ORGANIZATION 1 7 7
TRENDS IN SUPPLY CHAIN MANAGEMENT 1 4 1 THE SUPPLY CHAIN LINK 1 7 8
SUPPLY CHAIN MANAGEMENT WITHIN OM: THE SUSTAINABILITY LINK 1 7 8
HOW IT ALL FITS TOGETHER 1 4 3 Chapter Highlights 179
SCM ACROSS THE ORGANIZATION 1 4 3 Key Terms 179
THE SUPPLY CHAIN LINK 1 4 4 Formula Review 180
THE SUSTAINABILITY LINK 1 4 4 Solved Problems 180
Chapter Highlights 145 Discussion Questions 181
Key Terms 146 Problems 181
Formula Review 146 Selected Bibliography 182
Solved Problems 146 ^
Discussion Questions 148 CHAPTER 6
Problems 148 Quality Control and Six Sigma 183
Selected Bibliography 149
WHAT IS STATISTICAL QUALITY CONTROL? 184
/
Links to Practice: Intel Corporation 185
CHAPTER 5 SOURCES OF VARIATION: COMMON AND ASSIGNABLE
Managing Quality 151 CAUSES 186
DESCRIPTIVE STATISTICS 186
DEFINING QUALITY 152
The Mean 186
Differences between Manufacturing and Service
Organizations 153 The Range and Standard Deviation 187
Links to Practice: General Electric
Distribution of Data 187
Company/Motorola, Inc. 154 STATISTICAL PROCESS CONTROL METHODS 187

COST OF QUALITY 155 Developing Control Charts 188

THE EVOLUTION OF TOTAL QUALITY MANAGEMENT Types of Control Charts 189
(TQM) 1 5 6 CONTROL CHARTS FOR VARIABLE^ \
Quality Gurus 157 Mean (x-Bar) Charts 190
THE PHILOSOPHY OF TQM 1 6 1 Range (R) Charts 1 r
Customer Focus 161 Using Mean ?~
Continuous Improvement 161 CONTROL CHAf^
Employee Empowerment 163 P-Charts 197X
Links to Practice: The Walt Disney Company 1 6 4 C-Charts 200
Use of Quality Tools 164 PROCESS CAPABILIt
Links to Practice: The Kroger Company/Meijer Stores Measuring ProcessN
Limited Partnership 167 SIX SIGMA QUALITY 2fc
XVlii • CONTENTS
Links to Practice: Motorola, Inc. 2 0 8
ACCEPTANCE SAMPLING 209
Sampling Plans 209
Operating Characteristic (OC) Curves 210
Developing OC Curves 212
Average Outgoing Quality 213
IMPLICATIONS FOR MANAGERS 215
How Much and How Often to Inspect 215
Where to Inspect 215
W h i c h Tools to Use 216
STATISTICAL QUALITY CONTROL IN SERVICES 216
Links to Practice: The Ritz-Carlton Hotel Company, L.L.C./
Nordstrom, Inc. 217
Links to Practice: Marriott International,
STATISTICAL QUALITY CONTROL (SQC) WITHIN OM:
HOW IT ALL FITS TOGETHER 218
STATISTICAL QUALITY CONTROL (SQC) ACROSS THE
ORGANIZATION 218
THE SUPPLY CHAIN LINK 219
THE SUSTAINABILITY LINK 219
Chapter Highlights 220
Key Terms 220
Formula Review 221
Solved Problems 221
Discussion Questions 226
Problems 226
Selected Bibliography 229
CHAPTER 7
Lean Systems 230
THE PHILOSOPHY OF JIT 232
Eliminate Waste 233
A Broad View of Operations 233
Simplicity 233
Continuous Improvement 234
Visibility 234
Flexibility 234
ELEMENTS OF JIT 235
Just-in-Time Manufacturing 235
Total Quality Management (TQM) 237
Respect for People 237
Links to Practice: Texas Instruments 238
JUST-IN-TIME MANUFACTURING 238
The Pull System 238
Kanban Production 239
Variations of Kanban Production 242
Small Lot Sizes and Quick Setups 242
Uniform Plant Loading 243
Flexible Resources 244
Facility Layout 245
Links to Practice: Ryder Integrated Logistics 245
TOTAL QUALITY MANAGEMENT 2 4 6
Product versus Process 247
Quality at the Source 247
Preventive Maintenance 248
Work Environment 248
RESPECT FOR PEOPLE 249
The Role of Production Employees 249
Lifetime Employment 250
Inc. 217 The Role of Management 251
Supplier Relationships 252
BENEFITS OF JIT 253
Links to Practice: Alcoa, Inc. 253
IMPLEMENTING JIT 2 5 4
JIT IN SERVICES 255
Improved Quality 255
Uniform Facility Loading 255
Use of Multifunction Workers 256
Reductions in Cycle Time 256
Minimizing Setup Times and Parallel Processing 256
Workplace Organization 256
JIT AND LEAN SYSTEMS WITHIN 0 M : HOW IT ALL FITS
TOGETHER 256
JIT AND LEAN SYSTEMS ACROSS THE
ORGANIZATION 256
THE SUPPLY CHAIN LINK 257
THE SUSTAINABILITY LINK 258
Chapter Highlights 258
Key Terms 259
Formula Review 259
Solved Problems 259
Discussion Questions 260
Problems 260 ' . c-v '
Selected Bibliography 260 ^
CHAPTER 8
Forecasting and Demand Planning 262
PRINCIPLES OF FORECASTING 263
STEPS IN THE FORECASTING PROCESS 2 6 4
Links to Practice: Intel Corporation 265
TYPES OF FORECASTING METHODS 265
Links to Practice: Improving Sales Forecasting 266
 CONTENTS • XIX

Qualitative Methods 266 MAKING CAPACITY PLANNING DECISIONS 3 1 9

Quantitative Methods 268 Identify Capacity Requirements 320
TIME SERIES MODELS 270 Develop Capacity Alternatives 321
Forecasting Level or Horizontal Pattern 271 Evaluate Capacity Alternatives 321
Forecasting Trend 279 DECISION TREES 3 2 1
Forecasting Seasonality 282 LOCATION ANALYSIS 324
Links to Practice: The Ski Industry Forecast 285 What Is Facility Location? 325
CAUSAL MODELS 285 Factors Affecting Location Decisions 325
Linear Regression 285 Links to Practice: Locating in Silicon Valley 326
Correlation Coefficient 288 Globalization 327
Multiple Regression 289 MAKING LOCATION DECISIONS 329
MEASURING FORECAST ACCURACY 289 Procedure for Making Location Decisions 329
Forecast Accuracy Measures 289 Procedures for Evaluating Location Alternatives 329
Tracking Signal 291 CAPACITY PLANNING AND FACILITY LOCATION WITHIN
SELECTING THE RIGHT FORECASTING MODEL 292 OM: HOW IT ALL FITS TOGETHER 3 4 0
FORECASTING SOFTWARE 293 CAPACITY PLANNING AND FACILITY LOCATION ACROSS
Spreadsheets 293 THE ORGANIZATION 3 4 0
Statistical Packages 293 THE SUPPLY CHAIN LINK 341
Specialty Forecasting Packages 294 THE SUSTAINABILITY LINK 341
Guidelines for Selecting Forecasting Software 294 Chapter Highlights 341
FOCUS FORECASTING 295 Key Terms 342
COMBINING FORECASTS 295 Formula Review 342
Links to Practice: Combining Methods in Weather Solved Problems 342
Forecasting 296 Discussion Questions 345
COLLABORATIVE PLANNING, FORECASTING, Problems 346
AND REPLENISHMENT (CPFR) 296 Selected Bibliography 348
FORECASTING WITHIN OM: HOW IT ALL FITS
TOGETHER 297 CHAPTER 10
FORECASTING ACROSS THE ORGANIZATION 297 Layout Planning 350
THE SUPPLY CHAIN LINK 298
WHAT IS LAYOUT PLANNING? 3 5 1
THE SUSTAINABILITY LINK 298
TYPES OF LAYOUTS 352
Chapter Highlights 299
Process Layouts 352
Key Terms 299
Links to Practice: Wal-Mart Stores, Inc. 3 5 4
Formula Review 300
Product Layouts 354
Solved Problems 301
Links to Practice: Toyota Motor Corporation 3 5 6
Discussion Questions 305
Hybrid Layouts 356
Problems 305
Fixed-Position Layouts 357
Selected Bibliography 309
DESIGNING PROCESS LAYOUTS 357
CHAPTER 9 Step 1: Gather Information 357
Capacity and Location Decisions 311 Step 2: Develop a Block Plan 360
Step 3: Develop a Detailed Layout 363
CAPACITY PLANNING 313
SPECIAL CASES OF PROCESS LAYOUT 363
Why Is Capacity Planning Important? 313
Warehouse Layouts 363
Links to Practice: Capacity Planning in the ER 313
Office Layouts 366
Measuring Capacity 314
DESIGNING PRODUCT LAYOUTS 367
Capacity Considerations 316
Links to Practice: Focus in the Retail Industry 319
XX • CONTENTS

Step 1: Identify Tasks and Their Immediate Predetermined Time Data 403
Predecessors 367 Work Sampling 405
Step 2: Determine Output Rate 369 Links to Practice: Pace Productivity 407
Step 3: Determine Cycle Time 369 COMPENSATION 4 0 7
Step 4: Compute the Theoretical Minimum Number of Time-Based Systems 407
Stations 371 Output-Based Systems 407
Step 5: Assign Tasks to Workstations (Balance the Group Incentive Plans 408
Line) 371 Links to Practice: Accountable Care
Step 6: Compute Efficiency, Idle Time, and Balance Organizations (ACO) 4 0 8
Delay 372 Incentive Plan Trends 409
Other Considerations 373 LEARNING CURVES 4 0 9
GROUP TECHNOLOGY (CELL) LAYOUTS 3 7 4
WORK SYSTEM DESIGN WITHIN OM: HOW IT ALL FITS
FACILITY LAYOUT WITHIN OM: HOW IT ALL FITS
TOGETHER 4 1 2
TOGETHER 375
WORK SYSTEM DESIGN ACROSS THE ORGANIZATION 4 1 2
FACILITY LAYOUT ACROSS THE ORGANIZATION 3 7 5 THE SUPPLY CHAIN LINK 4 1 3
THE SUPPLY CHAIN LINK 3 7 6 THE SUSTAINABILITY LINK 4 1 3
THE SUSTAINABILITY LINK 3 7 6 Chapter Highlights 414
Chapter Highlights 377 Key Terms 414
Key Terms 377 Formula Review 415
Formula Review 377 Solved Problems 415
Solved Problems 378 Discussion Questions 418
Discussion Questions 380 Problems 418
Problems 380 Selected Bibliography 421
Selected Bibliography 384
CHAPTER 12
Inventory Management Policies 423
CHAPTER 11
Job Design and Work Measurement 385 TYPES OF INVENTORY 4 2 4
HOW COMPANIES USE THEIR INVENTORY 4 2 5
DESIGNING A WORK SYSTEM 3 8 6
OBJECTIVES OF INVENTORY MANAGEMENT 4 2 7
JOB DESIGN 387
Customer Service 427
Designing a Job 387
Cost-Efficient Operations 428
Links to Practice: Google 3 8 7
Minimum Inventory Investment 429
Machines or People? 388
RELEVANT INVENTORY COSTS 4 3 1
Level of Labor Specialization 389
Item Costs 431
Eliminating Employee Boredom 390
Holding Costs 431
Team Approaches to Job Design 390
Ordering Costs 433
Links to Practice: The SCO Group 3 9 1
Shortage Costs 433
The Alternative Workplace 391
ABC INVENTORY CLASSIFICATION 433
Links to Practice: AT&T 392
Procedure for an ABC Inventory Analysis 435
METHODS ANALYSIS 393
Inventory Control Using ABC Classification 435
THE WORK ENVIRONMENT 395
INVENTORY RECORD ACCURACY 4 3 6
WORK MEASUREMENT 396
Links to Practice: Cisco Systems^ Inc. 4 3 6
Costing 396
INVENTORY IN SERVICE ORGANIZATIONS 4 3 8
Performance 397
DETERMINING ORDER QUANTITIES 4 3 9
Planning 397
MATHEMATICAL MODELS FOR DETERMINING ORDER
SETTING STANDARD TIMES 397
QUANTITY 4 4 0
How to Do a Time Study 397
Economic Order Quantity (EOQ) 440
Elemental Time Data 403
Calculating the EOQ 443

Economic Production Quantity (EPQ) 445
Quantity Discount Model 449
WHY COMPANIES DON'T ALWAYS USE THE OPTIMAL
ORDER QUANTITY 453
JUSTIFYING SMALLER ORDER QUANTITIES 453
Links to Practice: Kenworth Trucks 453
Understanding the EPQ Factors 454
DETERMINING SAFETY STOCK LEVELS 4 5 5
How Much Safety Stock? 455
PERIODIC REVIEW SYSTEM 4 5 7
Comparison of Continuous Review Systems and
Periodic Review Systems 4 5 9
THE SINGLE-PERIOD INVENTORY MODEL 4 6 0
INVENTORY MANAGEMENT WITHIN OM: HOW IT ALL
FITS TOGETHER 462
INVENTORY MANAGEMENT ACROSS THE
ORGANIZATION 4 6 3
THE SUPPLY CHAIN LINK 4 6 3
THE SUSTAINABILITY LINK 4 6 4
Chapter Highlights 464
Key Terms 465
Formula Review 465
Solved Problems 466
Discussion Questions 469
Problems 470
Selected Bibliography 4 7 2 ' ~~
CHAPTER 13
Sales and Operations Planning 473
THE ROLE OF AGGREGATE PLANNING 4 7 5
Marketing Plan 475
Aggregate or Production Plan 475
Financial and Engineering Plans 476
Master Production Schedule 476
Links to Practice: Coca-Cola Midi (CCM) 4 7 7
TYPES OF AGGREGATE PLANS 4 7 7
Level Aggregate Plan 477
Chase Aggregate Plan 478
Hybrid Aggregate Plan 479
AGGREGATE PLANNING OPTIONS 4 7 9
Demand-Based Options 480
Capacity-Based Options 480
EVALUATING THE CURRENT SITUATION 4 8 2
Links to Practice: UPS Hires Seasonal Workers 483
DEVELOPING THE AGGREGATE PLAN 483
AGGREGATE PLANS FOR COMPANIES WITH TANGIBLE
PRODUCTS 485
CONTENTS • XXI
AGGREGATE PLANS FOR SERVICE COMPANIES WITH
NONTANGIBLE PRODUCTS 4 8 8
AGGREGATE PLANNING WITHIN OM: HOW IT ALL FITS
TOGETHER 4 9 2
AGGREGATE PLANNING ACROSS THE
ORGANIZATION 4 9 3
THE SUPPLY CHAIN LINK 4 9 3
THE SUSTAINABILITY LINK 4 9 4
Chapter Highlights 494
Key Terms 494
c Solved Problems 495
Discussion Questions 501
Problems 502
Selected Bibliography 504
CHAPTER 14
Materials Planning 505
ENTERPRISE RESOURCE PLANNING 507
ERP Modules 508
THE EVOLUTION OF ERP 5 0 8
First-Generation ERP 508
x
Second-Generation ERP 509
Links to Practice: Arapahoe County Government 5 1 0
THE BENEFITS OF ERP 5 1 1
Links to Practice: i2 Technologies 5 1 1
f
Links to Practice: SAP AG 512
THE COST OF ERP SYSTEMS 512
MATERIAL PLANNING SYSTEMS 513
AN OVERVIEW OF MRP 513
TYPES OF DEMAND 5 1 4
OBJECTIVES OF MRP 516
MRP INPUTS 5 1 6
Authorized MPS 516
Inventory Records 516
Bills of Material 518
THE MRP EXPLOSION PROCESS 5 2 1
ACTION NOTICES 525
COMPARISON OF LOT SIZE RULES 5 2 5
THE ROLE OF CAPACITY REQUIREMENTS
PLANNING (CRP) 5 2 6
RESOURCE PLANNING WITHIN OM: HOW IT ALL FITS
TOGETHER 5 2 8
RESOURCE PLANNING ACROSS THE ORGANIZATION 5 2 9
THE SUPPLY CHAIN LINK 5 3 0
THE SUSTAINABILITY LINK 5 3 0
Chapter Highlights 531
Key Terms 531
Formula Review 532
XXii • CONTENTS
Solved Problems 532
Discussion Questions 535
Problems 535 *
Selected Bibliography 537
CHAPTER 15
Operations Scheduling 538
SCHEDULING OPERATIONS 540
HIGH-VOLUME OPERATIONS 5 4 0
Characteristics of Flow Operations 540
LOW-VOLUME OPERATIONS 5 4 1
Gantt Chart 541
SCHEDULING WORK 5 4 2
Infinite Loading 542
Finite Loading 543
Forward Scheduling 543
Backward Scheduling 544
Monitoring Workflow 544
HOW TO SEQUENCE JOBS 5 4 6
Priority Rules 546
How to Use Priority Rules 547
MEASURING PERFORMANCE 5 4 8
Links to Practice: Airline Scheduling 548
Job Flow Time 548
Average Number of Jobs in the System 549
Makespan 549
Job Lateness and Tardiness 549
COMPARING PRIORITY RULES 5 5 0
Comparing SPT and S/RO 55,3
SEQUENCING JOBS THROUGH TWO
WORK CENTERS 553
SCHEDULING BOTTLENECKS 5 5 5
Links to Practice: l-800-FL0WERS.com 557
THEORY OF CONSTRAINTS 5 5 8
SCHEDULING FOR SERVICE ORGANIZATIONS 5 5 8
Scheduling Services Demanded 558
Scheduling Employees 560
DEVELOPING A WORKFORCE SCHEDULE 5 6 1
SCHEDULING WITHIN OM: PUTTING IT ALL
TOGETHER 5 6 2
SCHEDULING ACROSS THE ORGANIZATION 5 6 3
THE SUPPLY CHAIN LINK 5 6 4
THE SUSTAINABILITY LINK 5 6 4
Chapter Highlights 564
Key Terms 565
Formula Review 565
Solved Problems 565
Discussion Questions 569
Problems 569
Selected Bibliography 572
CHAPTER 16
PERT, CPM and Critical Chain 573
PROJECT LIFE CYCLE 575
Conception 575
Feasibility Analysis or Study 575
Planning 576
Execution 576
Termination 576
NETWORK PLANNING TECHNIQUES 576
Links to Practice: PERT and the Polaris Missile 5 7 6
Step 1: Describe the Project 577
Step 2: Diagram the Network 578
Step 3: Estimate the Project's Completion
Time 579
Step 3 (a): Deterministic Time Estimates 580
Step 3 (b): Probabilistic Time Estimates 582
Step 4: Monitor the Project's Progression 588
Links to Practice: Managing the Olympic Games 5 8 8
ESTIMATING THE PROBABILITY OF COMPLETION
DATES 589
REDUCING PROJECT COMPLETION TIME 5 9 1
Crashing Projects 591
/ THE CRITICAL CHAIN APPROACH 5 9 4
Adding Safety Time 594
Wasting Safety Time 594
PROJECT MANAGEMENT WITHIN OM: HOW IT ALL FITS
TOGETHER 5 9 6
PROJECT MANAGEMENT OM ACROSS THE
ORGANIZATION 5 9 6
THE SUPPLY CHAIN LINK 5 9 7
THE SUSTAINABILITY LINK 5 9 7
Chapter Highlights 597
Key Terms 598
Formula Review 598
Solved Problems 598
Discussion Questions 602 t
Problems 602 ^
Selected Bibliography 605
APPENDIX A
Solutions to Odd-Numbered Problems 607
APPENDIX B

The Standard Normal Distribution 629
APPENDIX C OUTCOMES OF LINEAR PROGRAMMING PROBLEMS B16
P-Chartf 630
NAME I N D E X 633
SUBJECT I N D E X 636
SUPPLEMENT A
Spreadsheet Modeling; An Introduction Ai
WHAT ARE MODELS? A2
THE SPREADSHEET MODELING PROCESS A4
EVALUATING SPREADSHEET MODELS A5
Planning the Model A 7
Implementing the Model in Excel A8
Assessing the Model A9
Using the Model for Analysis A l l
Adding Data Tables A14
Graphing the Model Results A17
Planning the Model A18
Constructing the Model in Excel A19
Reviewing Relative and Absolute
Cell Referencing A20
Entering Formulas in the Model A 2 1
USEFUL SPREADSHEET TIPS A26
IMPORTANT EXCEL FORMULAS A27
SPREADSHEET MODELING WITHIN OM: HOW IT ALL
FITS TOGETHER A28
Supplement Highlights A29
Key Terms A29
Discussion Questions A29
Problems A30
Case: Diet Planning A3 2
Online Resources A3 2
Selected Bibliography A3 2
SUPPLEMENT B Case: The Copy Center Holdup C19
Introduction to Optimization Bi
INTRODUCTION B2
ALGEBRAIC FORMULATION B4
Examining the Formulation B6
SPREADSHEET MODEL DEVELOPMENT B7
Testing the Model B8
SOLVER BASICS B9
SETTING UP AND RUNNING SOLVER B9
Solving the Problem B12
INTERPRETING THE SOLUTION B 1 3
CONTENTS • XXlii
SOLVER SOLUTION REPORTS B14
RECAP B16
OPTIMIZATION WITHIN OM: HOW IT ALL FITS
TOGETHER B 1 8
Supplement Highlights B18
Key Terms B19
Solved Problems B19
Discussion Questions B23
Problems B24
Case: Exeter Enterprises B 2 5
Online Resources B26
Selected Bibliography B26
SUPPLEMENT C
Waiting Line Models ci
ELEMENTS OF WAITING LINES C2
Links to Practice: Waiting for Fast Food C3
The Customer Population C3
The Service System C4
Arrival and Service Patterns C6
Waiting Line Priority Rules C6
WAITING LINE PERFORMANCE MEASURES C7
SINGLE-SERVER WAITING LINE MODEL C7
MULTISERVER WAITING LINE MODEL CIO
CHANGING OPERATIONAL CHARACTERISTICS C13
LARGER-SCALE WAITING LINE SYSTEMS C14
WAITING LINE MODELS WITHIN OM: HOW IT ALL FITS
TOGETHER C 1 5
Supplement Highlights C15
Key Terms C16
Formula Review C16
Solved Problems C16
Discussion Questions C18
Problems C19
Online Resources C20
Selected Bibliography C20
SUPPLEMENT D
Master Scheduling and Rough-Cut
Capacity Planning Di
MASTER PRODUCTION SCHEDULING D2
MPS AS A BASIS OF COMMUNICATION D3
OBJECTIVES OF MASTER SCHEDULING D4
DEVELOPING AN MPS D4
XXiv • CONTENTS

ROUGH-CUT CAPACITY PLANNING D6 Formula Review D16

EVALUATING AND ACCEPTING THE MPS D9 Solved Problems D17
USING THE MPS D10 Discussion Questions D22
USING THE ATP RECORDS D l l Problems D22
STABILIZING THE MPS D14 Case: Newmarket International Manufacturing
MASTER PRODUCTION SCHEDULING AND ROUGH-CUT Company (c) D23
CAPACITY PLANNING WITHIN OM: HOW IT ALL FITS Online Resources D24
TOGETHER D15 Selected Bibliography D24
Supplement Highlights D16
Key Terms D16